General Motors Co. in Detroit on Tuesday said it would take a $1.6 billion charge in the third quarter of 2024 as it adjusts its electric vehicle strategy after the U.S. tax credit for new and used EV sales expired on Sept. 30 and the market for the vehicles didn’t grow as fast as expected.
Until Sept. 30, new EV buyers received a $7,500 tax credit and used EV buyers could get a $4,000 tax rebate.
“General Motors Co. made significant investments and contractual commitments in the development of electric vehicles to help the company’s fleet comply with emissions and fuel economy regulations that were scheduled to become increasingly stringent,” the company stated in a government regulatory filing.
“Following recent U.S. Government policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations, we expect the adoption rate of EVs to slow,” the filing continued. “These developments have caused us to reassess our EV capacity and manufacturing footprint.”
These charges include non-cash impairment and other charges of $1.2 billion as a result of adjustments to GM’s EV capacity. In addition, the company has incurred charges of $0.4 billion, primarily related to contract cancellation fees and commercial settlements associated with EV-related investments, which will have a cash impact.
The reassessment of the automaker’s EV capacity and manufacturing footprint, including its investments in battery component manufacturing, is ongoing, GM says, and it is “reasonably possible” that it will recognize additional future material cash and non-cash charges that may adversely affect its results of operations and cash flows in the period in which they are recognized.
Last month, Reuters reported that GM will temporarily stop production of two electric Cadillac SUV models at its Spring Hill, Tenn. plant in December, responding to the reduced federal support for EVs under the current administration.
The Spring Hill facility is responsible for the production of the midsize Cadillac Lyriq and larger Vistiq model.
